Thursday, September 20, 2012

About the Risk Intelligence Test

Risk Intelligence Quotient (RQ) is a measure of a person's ability to estimate probabilities accurately. People with high risk intelligence tend to make better predictions than those with low RQ.

The test consists of 50 statements which may be true or false. Your task is to say how likely you think it is that each statement is true:

if you are absolutely sure that a statement is true, you should click on the button marked 100%

if you are completely convinced that a statement is false, you should click on the button marked 0%

if you have no idea at all whether it is true or false, you should click on the button marked 50%

if you are fairly sure that it is true, but you aren’t completely sure, you should click on 60%, or 70%, or 80%, or 90%, depending on hot sure you are.

if you are fairly sure that it is false, but you aren’t completely sure, you should click on 40%, or 30%, or 20%, or 10%, depending on how sure you are.

Make sure you're sitting comfortably with no distractions. The test will take about five minutes to complete. If you wish to know more about risk intelligence, then continue reading towards the bottom of the page.

This test is rather unusual in that you can score very highly even if you don’t know much. That’s because this test measures self-knowledge rather than factual knowledge. It rewards you for gauging your own level of uncertainty accurately, rather than for knowing a bunch of facts.

Risk intelligence really comes into its own when you are neither completely certain nor completely uncertain – in other words, when you give estimates from 10% to 40% or between 60% and 90% (assuming that we only allow ten percent increments in the estimates). This is the twilight zone between the stuff you really know and the stuff about which you don’t have a clue.

Think of your mind as a light bulb shining in a dark room. Those objects which are fully illuminated by the light from the bulb are the things you know for sure. The objects which are still shrouded in darkness are the things about which you know nothing. Between the light and the darkness, however, lies a grey area in which the level of illumination gradually shades away. In this “event horizon”, the objects are not fully illuminated, but neither are they completely invisible. These are the things which you don’t know for sure, but which you have an inkling. Gauging exactly how much you know you about these things is the basis of risk intelligence.